Monetary Policy Operation and Economic Growth in Nigeria: Evidence from 1990 – 2022 (Published)
The study examined monetary policy operations and economic growth in Nigeria from 1990 to 2022. The primary purpose is to evaluate the impact of monetary policy operations on Nigeria’s economic growth. The data for the study were obtained from National Bureau of statistics (NBS) databased and Central Bank of Nigeria CBN statistical bulletin. The econometric methods of OLS, Co-integration, Variance Error Correction Mechanism (VECM) and Vector Error Correction Model (VECM) were employed to examined the interplay among the critical variables. The natural log of real GDP was employed as the variable of interest while exchange rate and inflation rate as instrument of monetary policy operations. The result of the VECM shows that the overall model is satisfactory given the coefficient of determination of 34 percent and f-statistics of 3.37. The study discovered that the explanatory variables were not statistically significant at 5% level in stimulating economic growth in Nigeria. However, the long run dynamic result also shows that there exists a long-run relationship or equilibrium among the variables. The result of VARM revealed that exchange rate has positive coefficients, indicating a positive relationship with the lagged RGDP. The model has a moderately high R-squared value (0.9429), indicating a reasonably good fit. While inflationary rate indicates negative coefficients with the lagged exchange rate. The model has a lower R-squared value (0.2862), indicating a weaker fit to the data. These finding hold significant implications for the Nigerian economy, highlighting the effectiveness of monetary policy, the importance of exchange rate stability, and the imperative of inflation control in promoting sustained economic growth. Policymakers are urged to prioritise evidence-based decisions, long-term planning, and target interventions to harness the full potential of monetary policy in driving sustainable economic development in Nigeria.
Keywords: Exchange Rate (EXR), Inflation Rate (IFR), Monetary Policy, Real Gross Domestics Products (RGDP), economic growth
CBN Monetary Policy and Inflation Nexus in Nigeria: An empirical approach (Published)
The study explored monetary policy effect on inflation stabilization in Nigeria. Increasing levels of indebtedness may have reduced the fiscal space for fiscal policy intervention and this leaves monetary policy as the real tool of choice for macroeconomic stabilisation. The question we need to ask then is, how effective is this tool of choice? Monthly time series data from 2009-2018 were used in estimating the model. The ADF test for the stationarity, the johansen cointegration test and the vector error correction model were utilized in testing the variables. The findings from the unit root test did indicate stationarity at first difference 1(1). The cointegration (Johansen) test indicates that there was a nexus linking inflation and all the regressors adopted in the long term. The result of the VECM for the two estimated models shows a self-equilibrating mechanism of 14 per cent and 32 per cent for the first and second models respectively. The findings further reveal that the variables; liquidity ratio, policy rate (MPR), exchange rate, reserve requirement and treasury bills rate all had an effective impact on the inflation rate and that that effect was very significant. Hence, the CBN’s monetary policy shocks do seem to have the expected traction on the Nigerian economy. The results make it pertinent for the CBN to utilize all the policy measures adopted in order to keep inflation within acceptable thresholds and prepare to keep inflation within the targeted range of 6-9 per cent, no matter the anticipated or unanticipated strong head winds.
Keywords: ADF, CBN, Cointegration, Monetary Policy, Unit Root, VECM
Monetary Policy and Inclusive Growth in Nigeria (Published)
The objective of the study is to determine the impact of monetary policy on inclusive growth. The study employed multivariate regression model to establish the effect. Data was collected on PCI as proxy for inclusive growth, and exchange rate, interest rate and money supply as monetary policy tools. The OLS technique revealed a significant variation between money supply and inclusive growth which implies that it will be in the best interest of the populace if monetary policy measures are employed to effect changes in the economy.
Keywords: Growth, Monetary Policy, Nigeria, inclusive
Relationship between Monetary Policy and Output Growth in Oil Producing Countries in Africa: Error Correction Model Based On Panel Cointegration Analysis (Published)
This study broadly examined the relationship between monetary policy and output growth in selected oil producing countries in Africa, using time series data spanning from 1980 to 2016. Specifically, the study analyzed the long-run relationship between macroeconomic variables and output growth in selected oil producing countries in Africa. The study confirmed thestationarity of the time series properties of all the variables in the study, using ImPersaran and Shin (IPS) panel unit root test. The study employed Westerlund Error Correction Based Panel Co-integration test to unify the short run and the long run dynamics. Findings from the study showed that there is a long term co-movement between output growth and macroeconomic variables in the selected oil producing African countries. The results from the long – run model of the fixed effect Regression further corroborate the report from the Westerlund Panel Co-integration test where all macroeconomic variables (RINTR, EXR, WOP and USRINTR) have significant long term impact on output growth. Although, the short – term impacts of these macroeconomic variables on output growth are also significant as shown by the short – run model of the fixed effect regression. Based on the findings of this study, it was therefore suggested that the regulatory and supervisory framework for the financial sector should be strengthened in order to improve the effectiveness of monetary policies of the government.
Keywords: Error Correction Model, Monetary Policy, oil producing countries, output growth, panel co-integration analysis